) is set to report its first-quarter 2013 results on Apr 24
before the market opens. Last quarter, it posted a 3.9% positive
surprise. Let's see how things are shaping up for this
Growth Factors this Past Quarter
Strong top-line growth driven by the blu e-Cigs electronic
cigarette brand and continued increase in retail market share of
cigarettes proved to be Lorillard's strength in the fourth
quarter of 2012. The company's share buyback program and lower
tax rates also fueled earnings.
Lorillard's fourth quarter earnings of 79 cents per share
exceeded the prior-year earnings by 8.2%. Net sales surpassed
both the Zacks Consensus Estimate and the prior-year quarter on
the back of increased revenues from its cigarettes and electronic
cigarettes segments. Lorillard's Newport cigarette brand
continued to gain popularity even with higher cigarette pricing
amid overall slowdown in the cigarette industry. In addition,
sales in the electronic cigarette segment increased almost three
times from the prior quarter, owing to the blu e-Cigs brand.
Our proven model does not conclusively show that Lorillard is
likely to beat earnings this quarter. That is because a stock
needs to have both a positive earnings Expected Surprise
Prediction (ESP) (Read:
Zacks Earnings ESP: A Better Method
) and a Zacks Rank #1, #2 or #3 for this to happen. That is not
the case here as shown below.
The Earnings ESP is 0.00%.
Zacks Rank #3 (Hold):
Lorillard's Zacks Rank #3 (Hold) lowers the predictive power of
ESP because the Zacks Rank #3 when combined with an ESP of 0.00%
makes surprise prediction difficult.
We caution against stocks with Zacks Rank #4 and #5 (Sell
rated stocks) going into the earnings announcement, especially
when the company is seeing negative estimate revisions
Other Stocks to Consider
Here are some other companies in the consumer staples sector
you may want to consider as our model shows they have the right
combination of elements to post an earnings beat this
Flower Foods Inc
) with Earnings ESP of +4.88% and a Zacks Rank #1 (Strong
Kraft Foods Group, Inc.
) with Earnings ESP of +3.13% and a Zacks Rank #2 (Buy)
Molson Coors Brewing Co.
) with Earnings ESP of +2.86% and a Zacks Rank #3 (Hold)
FLOWERS FOODS (FLO): Free Stock Analysis
KRAFT FOODS GRP (KRFT): Free Stock Analysis
LORILLARD CO (LO): Free Stock Analysis Report
MOLSON COORS-B (TAP): Free Stock Analysis
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